Econ 104 PSU EXAM 1 || with 100% Accurate Solutions.

Scarcity correct answers Although your wants are unlimited, the resources available to fulfill those wants are limited Economics correct answers Study of the choices consumers, business mangers and government officials make to attain their goals, given their scarce resources Economics Model correct answers A simplified description of reality, used to make predictions that can be tested with data 3 Main Ideas correct answers 1. People are rational 2. People respond to economic incentives 3. Optimal decisions are made at the margin Marginal Analysis correct answers Involves comparing marginal benefits and marginal costs Marginal correct answers The next thing or additional Trade-off correct answers The idea that because of scarcity, producing more of one good or service means producing less of another good or service Opportunity Cost correct answers The highest valued alternative that must be given up to engage in an activity Productive efficiency correct answers a situation in which a good or service is produced at the lowest possible cost Allocative efficiency correct answers state of the economy in which production is in accordance with consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to marginal cost of producing it Voluntary exchange correct answers occurs in markets when both the buyer and seller of a product are made better off by the transaction Economic variable correct answers something measurable that can have different values, such as the wages of software programmers Production possibilities frontier (PPF) correct answers curve showing the maximum attainable combinations of two products that may be produced with available resources and current technology Opportunity cost correct answers the highest valued alternative that must be given up to engage in an activity